A customer inspects a refrigerator on display as a sales assistant looks on at a Croma electronics megastore in Mumbai. (Photographer: Vivek Prakash/Bloomberg)  

Government May Not Further Hike Import Duty On Non-Essential Items

The government may not go for another round of import duty hike on any more items and could take other measures to contain the impact of rupee slide on current account deficit, an official said.

The government, within a span of two weeks, has hiked import duty on a host of household items like refrigerators and air conditioners, and telecom and communications system products as it looked to cut import of non-essential items.

"Further hike in import duty on non essential goods is not likely," the official told PTI.

In the latest round of duty hike effective Oct. 12, the Finance Ministry increased the levy of import of base station, IP Radios, soft switches and Voice over Internet Protocol equipment, and optical transport equipment, among others, to up to 20 percent.

Also read: Customs Duty Hiked On Mobile Phone Parts And Other Communication Items

The import duty on mobile phones has been spared in the recent duty hike as the levy has already been raised earlier.

This round of duty hike was suggested by the Ministry of Electronics and IT, after discussion with Ministry of Commerce and Industry. We have gone ahead with their suggestion.
A Government Official.

The Indian rupee had touched a historic low of 74.50 per dollar on Oct. 11. It later recovered and closed the Oct. 12 trading session at 73.57 per dollar as global crude prices eased. The rupee has depreciated about 13 percent since the beginning of 2018.

Also read: Rupee Jumps The Most In Three Weeks

"We expect the rupee to rise from here. No more import curbs would be needed at the moment. Rather we should look at ways to check dependence on petrol, diesel," another official said.

On Sept. 27, the government had doubled duties on import of 19 items, including air conditioners, household refrigerators and washing machines (less than 10 kg), to 20 percent. The cost of import of these items was Rs 86,000 crore in 2017-18 fiscal.

Also read: India Considers More Import Curbs to Prop Up Rupee

Following a meeting by Prime Minister Narendra Modi, the government had on Sept. 14 announced that the centre would impose curbs on import of non-essential items to contain the widening CAD and check the rupee fall.

To address the issue of expanding CAD, the government will take necessary steps to cut down non-essential imports and increase exports. The commodities of which imports will be cut down will be decided after consultations with concerned ministries and will be WTO-compliant," Finance Minister Arun Jaitley had then said.

Also read: Government Doubles Import Duty On 328 Textile Items To 20%

Earlier in the day, a finance ministry official had said more steps will be taken to check CAD and hoped that the rupee would appreciate. "Rupee, balance of payments, CAD are the main worries, we have strategy in place to tackle situation. We will take action at opportune time on these issues," the official said.

The CAD widened to 2.4 percent of the GDP in the first quarter of 2018-19.